EXHIBIT 99.1
FOR IMMEDIATE RELEASE
WARRIOR ENERGY SERVICES CORPORATION REPORTS FINANCIAL RESULTS FOR THREE AND SIX
MONTHS ENDED JUNE 30, 2006
THURSDAY, AUGUST 10, 2006
Columbus, Mississippi. Warrior Energy Services Corporation (NASDAQ -
WARR) ("Warrior Energy" or the "Company") announced today its financial results
for the three and six months ended June 30, 2006.
For the three months ended June 30, 2006, Warrior Energy's revenues
were $32.5 million, an increase of approximately $12.8 million (64.9%) over
revenues of $19.7 million for the three months ended June 30, 2005 and an
increase of $5.2 million (19.1%) over revenues of $27.3 million for the three
months ended March 31, 2006. Revenues from the wireline segment were $24.3
million for the three months ended June 30, 2006 compared with revenues of $19.7
million during the three months ended June 30, 2005 (an increase of 23.3%) and
$20.7 million for the three months ended March 31, 2006 (an increase of 17.4%).
The Company had revenues of $8.2 million from its well intervention segment
during the three months ended June 30, 2006, an increase of $1.6 million (24.4%)
over revenues of $6.6 million for the three months ended March 31, 2006. The
Company entered into the well intervention business in December 2005 with its
acquisition of Bobcat Pressure Control, Inc. ("Bobcat") and as such, had no
revenues from this segment during the second quarter of 2005. Revenue growth for
the three months ended June 30, 2006 was driven by increased well service
activity levels, improved pricing, additions of assets in the wireline segment
and the acquisition of Bobcat.
EBITDA for the three months ended June 30, 2006 was $11.5 million,
which was an increase of $5.3 million (83.5%) over EBITDA of $6.2 million for
the three months ended June 30, 2005 and an increase of $2.9 million (33.3%)
over EBITDA of $8.6 million for the three months ended March 31, 2006. EBITDA as
a percentage of revenues improved to 35.2% for the three months ended June 30,
2006 from 31.7% for the three months ended June 30, 2005 and 31.5% for the three
months ended March 31, 2006, primarily due to higher utilization of assets,
improved pricing and economies of scale.
For the three months ended June 30, 2006, the Company had operating
income of $8.7 million, which was an increase of $3.7 million (75.0%) over
operating income of $5.0 million for the same period of 2005 and an increase of
$2.8 million (47.3%) over operating income of $5.9 million for the three months
ended March 31, 2006. Operating income as a percentage of revenues improved to
26.7% in the three months ended June 30, 2006 versus 25.2% for the same period
of 2005 and 21.6% for the three months ended March 31, 2006, for the reasons
described above, partially offset by higher depreciation and amortization
expenses associated with the Bobcat acquisition.
Depreciation and amortization was $2.8 million in the three months
ended June 30, 2006, an increase of $1.5 million over $1.3 million during the
same period of 2005 and an increase of $0.1 million over $2.7 million during the
three months ended March 31, 2006. The year over year increase is mainly
comprised of $0.6 million of depreciation from the well intervention segment and
$0.6 million amortization of intangible assets from the Bobcat acquisition.
Provision for income taxes for the three months ended June 30, 2006 was
$2.8 million, versus $0.1 million for the same period of 2005 and $1.5 million
for the three months ended March 31, 2006. Approximately $0.9 million of the
provision for income taxes represents cash taxes payable.
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For the three months ended June 30, 2006, the Company had net income of
$4.8 million, or $0.45 per fully diluted share, compared with net income of $3.7
million, or $2.97 per fully diluted share, for the three months ended ended June
30, 2005 and $2.5 million, or $.56 per fully diluted share for the three months
ended March 31, 2006. The decrease in net income per share from the quarter
ended March 31, 2006 to the quarter ended June 30, 2006 is primarily due to an
increase in the number of shares outstanding caused by the Company's public
stock offering completed on April 24, 2006, partially offset by increased net
income. The computation of earnings per fully diluted share for the quarter
ended June 30, 2006 included 2,039,523 shares issuable on conversion of
outstanding options, warrants and convertible debt, all of which were issuable
at an exercise or conversion price of $7.50 per share. As of August 1, 2006, the
Company had 11,072,265 shares outstanding and options and warrants for an
additional 859,050 shares at an average exercise price of $7.51.
For the six months ended June 30, 2006, Warrior Energy's revenues were
$59.8 million, an increase of approximately $ 25.6 million (75.1%)over revenues
of $34.2 million for the six months ended June 30, 2005. Revenues from the
wireline segment were $45.0 million for the six months ended June 30, 2006
compared with revenues of $34.2 million during the six months ended June 30,
2005 (an increase of 31.7%). The Company had revenues of $14.8 million from its
well intervention segment during the six months ended June 30, 2006. The Company
entered into the well intervention business in December 2005 with its
acquisition of Bobcat and as such, had no revenues from this segment during the
six months ended June 30, 2005. Revenue growth for the quarter ended June 30,
2006 was driven by increased well service activity levels, improved pricing,
additions of assets in the wireline segment and the acquisition of Bobcat.
EBITDA for the six months ended June 30, 2006 was $20.1 million, which
was an increase of $11.0 million (120%) over EBITDA of $9.1 millions for the six
months ended June 30, 2005. EBITDA as a percentage of revenues improved to 33.5%
in the six moths ended June 30, 2006 versus 26.7% in the six moths ended June
30, 2005, primarily due to higher utilization of assets, improved pricing and
economies of scale.
For the six months ended June 30, 2006, the Company had operating
income of $14.6 million, which was an increase of $8.0 million (122%) over
operating income of $6.6 million for the six months ended June 30, 2005.
Operating income as a percentage of revenues improved to 24.4% in the six months
ended June 30, 2006 versus 19.2% in the six months ended June 30, 2005 for the
reasons described above, partially offset by higher depreciation and
amortization expenses associated with the Bobcat acquisition.
Depreciation and amortization was $5.5 million in the six months ended
June 30, 2006, an increase of $2.9 million over $2.6 million for the six months
ended June 30, 2005. This increase is mainly comprised of depreciation and
amortization from the Bobcat acquisition.
Provision for income taxes for the six months ended June 30, 2006 was
$4.3 million, versus $0.1 million for the six months ended June 30, 2005.
Approximately $0.9 million of the provision for income taxes represents cash
taxes payable.
For the six months ended June 30, 2006, the Company had net income of
$7.2 million, or $0.98 per fully diluted share, compared with net income of $4.4
million, or $3.49 per fully diluted share, for the six months ended June 30,
2005. The decrease in net income per share from the six months ended June 30,
2006 to six months ended June 30, 2005 is primarily due to an increase in the
number of shares outstanding caused by the Company's public stock offering
completed on April 24, 2006, partially offset by increased net income. The
computation of earnings per fully diluted share for the six months ended June
30, 2006 included 2,632,476 shares issuable on conversion of outstanding
options, warrants and convertible debt, all of which were issuable at an
exercise or conversion price of $7.50 per share.
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As of June 30, 2006 the Company had total debt and accrued interest of
$44.4 million and cash of $5.0 million versus total debt and accrued interest of
$96.8 million and cash of $0.9 million as of December 31, 2005. The improvement
in the Company's balance sheet is largely due to the public offering completed
in April, 2006, which is discussed below, and improved operations and cash flow
from the Company's businesses.
Cash provided by the Company's operating activities was approximately
$11.1 million (including a use of cash of $3.0 million for financing of the
Company's insurance premiums) for the six months ended June 30, 2006 as compared
to cash provided of approximately $6.4 million for the same period in 2005. The
increase in cash provided by operating activities was due mainly as a result in
the increase in demand for the Company's services. During the six months ended
June 30, 2006, investing activities used cash of approximately $22.9 million for
the acquisition of property, plant and equipment (including $5.1 million in
deposits on future deliveries of coiled tubing, nitrogen pumping and fluid
pumping units) as compared to $4.4 million for the same period in 2005. During
the six months ended June 30, 2006, financing activities used cash of
approximately $34.2 million for principal payments on debt offset by proceeds
from public offering, exercise of options, bank and other borrowings and net
draws on working capital revolving loans of approximately $50.2 million. During
the six months ended June 30, 2005, financing activities used cash of
approximately $2.5 million for principal payments on debt offset by proceeds
from bank and other borrowings and net draws on working capital revolving loans
of approximately $0.8 million.
Management attributed the Company's improved performance to strong
demand in the oilfield service sector, driving higher utilization of the
Company's assets and improved pricing. The Company also added four wireline
trucks in the second quarter, providing additional revenue generating capacity.
Also, the revenues from the entry into the well intervention business in
December 2005 were included for a full quarter. Bill Jenkins, President and CEO,
commented, "Our operating results for the second quarter of 2006 have shown
significant improvements. We believe that our operations should continue to
improve throughout 2006."
In April 2006 the Company completed a public offering of approximately
8.9 million shares of its common stock at $23.50 per share. Raymond James,
Simmons & Company, Interantional and Johnson Rice & Company, L.L.C. were the
underwriters. The Company received proceeds, net of underwriting commissions of
approximately $193.7 million ($21.85 per share) and paid approximately $5.6
million in related offering expenses. From the proceeds of the offering, the
Company repurchased all its outstanding related party promissory notes and
interest in April 2006, which were converted to equity in conjunction with the
offering. The Company was also able to reduce its outstanding indebtedness by
approximately $29.1 million.
Warrior Energy Services Corporation is a natural gas and oil service
company providing services to natural gas and oil well operators in the most
active basins in the continental United States and in the Gulf of Mexico. It is
headquartered in Columbus, Mississippi. Additional information may be obtained
by contacting Mr. Rob McNally, Executive Vice President, at (832) 775-0016 or
visiting the Company's website at www.warriorenergyservices.com.
Earnings Release and Investor Conference Call
A conference call and webcast has been scheduled for Thursday, August
10, 2006, at 10:30 a.m. CT (11:30 a.m. ET). Shareholders and all other
interested parties may participate in the conference call by dialing (888)
873-4896 and pass code 29799936 a few minutes before 10:30 a.m. CT (11:30 a.m.
ET) on August 10, 2006. To listen to a live webcast of the conference call, go
to
www.warriorenergyservices.com
and access our Investor Relations page where the webcast link will be
posted
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The webcast is also being distributed through the Thomson StreetEvents Network
to both institutional and individual investors. Individual investors can listen
to the call at Thomson/CCBN's individual investor portal, powered by
StreetEvents. Institutional investors can access the call via Thomson's
password-protected event management site, StreetEvents (www.streetevents.com).
The webcast replay will be available from 1:30 p.m. CT, Thursday, August 10,
until 11:59 p.m. CT on Wednesday, February 7, 2007. Listening to the webcast
requires speakers and Windows Media Player. If you do not have Media Player,
download the free software at www.windowsmedia.com.
If you do not have Internet access and want to listen to an audio replay, call
1-888-286-8010 and enter conference call code 63566290. The audio replay will be
available beginning at 1:30 p.m. CT on Thursday, August 10, 2006 until 11:59
p.m. CT on Thursday, August 17, 2006.
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SEGMENT INFORMATION
Segment information for the three and six months ended June 30, 2006 as well as
for certain corporate expenses not allocated to the individual operating
segments is as follows:
Well
For the Three Months Ended June 30, 2006 Wireline Intervention Corporate Total
- -----------------------------------------------------------------------------------------------------------------
Segment revenues $ 24,299,153 $ 8,211,053 $ - $ 32,510,206
Segment operating and sg&a expenses $ 14,155,965 $ 4,400,929 $ 2,495,177 $ 21,052,071
Segment depreciation and amortization $ 1,229,582 $ 1,247,953 $ 293,551 $ 2,771,086
Segment operating income $ 8,913,606 $ 2,562,171 $ (2,788,728) $ 8,687,049
Segment EBITDA (1) $ 10,143,188 $ 3,810,124 $ (2,495,177) $ 11,458,135
Segment assets $ 69,894,584 $ 58,542,032 $ 3,756,273 $132,192,889
Segment goodwill $ 1,237,417 $ 12,802,765 $ - $ 14,040,182
(1) Reconcilaition of EBITDA with net income:
Net income 4,770,738
Plus provision for income taxes 2,819,718
Minus other income (31,378)
Minus gain on sale of fixed assets (5,250)
Plus interest expense 1,133,221
Plus: depreciation and amortization 2,771,086
-----------------
EBITDA 11,458,135
Well
For the Six Months Ended June 30, 2006 Wireline Intervention Corporate Total
- ----------------------------------------------------------------------------------------------------------------
Segment revenues $ 45,000,572 $ 14,813,402 $ - $ 59,813,974
Segment operating and sg&a expenses $ 27,083,378 $ 7,899,416 $ 4,778,129 $ 39,760,923
Segment depreciation and amortization $ 2,490,466 $ 2,448,787 $ 529,737 $ 5,468,990
Segment operating income $ 15,426,728 $ 4,465,199 $ (5,307,866) $ 14,584,061
Segment EBITDA (1) $ 17,917,194 $ 6,913,986 $ (4,778,129) $ 20,053,051
Segment assets $ 73,213,567 $ 58,542,032 $ 437,290 $132,192,889
Segment goodwill $ 1,237,417 $ 12,802,765 $ - $ 14,040,182
(1) Reconcilaition of EBITDA with net income:
Net income 7,227,419
Plus provision for income taxes 4,281,184
Minus other income (50,229)
Minus gain on sale of fixed assets (6,750)
Plus interest expense 3,132,437
Plus: depreciation and amortization 5,468,990
-----------------
EBITDA 20,053,051
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WARRIOR ENERGY SERVICES CORPORATION
SUMMARIZED FINANCIAL INFORMATION
(In thousands, except for per share income data)
Three months ended June 30, Six months ended June 30,
2006 2005 2006 2005
---------------------------------------------------------
Income Statement Data
Revenues $32,510 $19,709 $59,814 $34,157
Expenses
Operating costs $17,067 $11,222 $32,244 $20,629
Selling, general and administrative expenses $ 3,985 $ 2,245 $ 7,517 $ 4,404
Depreciation and amortization $ 2,771 $ 1,279 $ 5,469 $ 2,563
EBITDA(1) $11,458 $ 6,242 $20,053 $ 9,124
Net Income $ 4,771 $ 3,714 $ 7,227 $ 4,360
Per share data
Net income per share - basic $ 0.55 $ 2.97 $ 1.03 $ 3.49
Net income per share - diluted $ 0.45 $ 2.97 $ 0.98 $ 3.49
June 30, December 31,
2006 2005
-----------------------
Balance Sheet Data
Total current assets $ 36,115 $ 23,106
Total assets $ 132,193 $ 101,634
Total current liabilities $ 30,137 $ 16,944
Total debt and accrued interest $ 44,435 $ 96,757
Total liabilities $ 69,590 $ 117,205
Total stockholders' equity (deficit) $ 62,603 $ (15,571)
Total liabilities and stockholders' equity
(deficit) $ 132,193 $ 101,634
(1) See attached reconciliation of Non-GAAP Financial Measures
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RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
To fully assess the Company's operating results, management believes that,
although not prescribed under generally accepted accounting principals ("GAAP"),
EBITDA is an appropriate measure of the Company's ability to satisfy capital
expenditure obligations and working capital requirements. EBITDA is a non-GAAP
financial measure as defined under SEC rules. The Company's EBITDA should not be
considered in isolation or as a substitute for other financial measurements
prepared in accordance to GAAP or as a measure of the Company's profitability or
liquidity. As EBITDA excludes some, but not all, items that affect net income
and may vary among companies, the EBITDA presented below may not be comparable
to similarly titled measures of other companies. Management believes that net
income (loss) calculated in accordance with GAAP is the most directly comparable
measure most similar to EBITDA.
EBITDA is defined as net income (loss) plus interest expense, depreciation and
amortization, deferred income taxes and other non-cash items. The following
table provides a reconciliation of EBITDA to net income for the periods
presented (in thousands).
Three months ended June 30, Six months ended June 30,
2006 2005 2006 2005
------------------------- -------------------------
Reconciliation of EBITDA with net income:
Net income $ 4,771 $ 3,714 $ 7,227 $ 4,360
Plus provision for income taxes $ 2,820 $ 85 $ 4,281 $ 85
Less other income $ (32) $ 215 $ (50) $ 205
Less gain on sale of fixed assets $ (5) $ (13) $ (6) $ (13)
Plus interest expense $ 1,133 $ 962 $ 3,132 $ 1,924
Plus: depreciation and amortization $ 2,771 $ 1,279 $ 5,469 $ 2,563
-------- -------- -------- --------
EBITDA $ 11,458 $ 6,242 $ 20,053 $ 9,124
======== ======== ======== ========
The Company believes EBITDA is useful to an equity investor in evaluating its
operating performance because:
o it is widely used by investors in the Company's industry to measure
a company's operating performance without regard to items such as
interest expense, depreciation and amortization, which can vary
substantially from company to company depending upon accounting
methods and book value of assets, capital structure and the method
by which the assets were acquired; and
o it helps investors more meaningfully evaluate and compare the
results of the Company's operations from period to period by
removing the impact of the Company's capital structure and asset
base from its operating results.
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CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995.
With the exception of historical matters, the matters discussed in this
press release are "forward-looking statements" as defined under the Securities
Exchange Act of 1934, as amended, that involve risks and uncertainties. The
Company intends that the forward-looking statements herein be covered by the
safe-harbor provisions for forward-looking statements contained in the
Securities Exchange Act of 1934, as amended, and this statement is included for
the purpose of complying with these safe-harbor provisions. Such forward-looking
statements relate to the Company's ability to generate revenues and maintain
profitability and cash flow, the stability and level of prices for natural gas
and oil, predictions and expectations as to the fluctuations in the levels of
natural gas and oil prices, pricing in the natural gas and oil services industry
and the willingness of customers to commit for natural gas and oil well
services, the Company's ability to implement its intended business plans, which
include, among other things, the implementation of its previously announced
growth initiatives and business strategy and goals, the Company's ability to
raise additional debt or equity capital to meet its requirements and to
implement its intended growth initiatives and to obtain additional financing to
fund that growth when required, the Company's ability to maintain compliance
with the covenants of its credit agreement and obtain waivers of violations that
occur and consents to amendments as required, the Company's ability to compete
in the premium natural gas and oil services market, the Company's ability to
re-deploy its equipment among regional operations as required, the Company's
ability to provide services using state of the art tooling and its ability to
successfully integrate and operate the well intervention operations acquired
from Bobcat. The Company's revenues and net income are dependent on the level of
exploration, development and production expenditures by its customers. The
Company's forward-looking statements also include the possible completion of any
future business acquisition transactions. The inability of the Company to meet
these goals, objectives or requirements or the consequences on the Company from
adverse developments in general economic conditions, changes in capital markets,
adverse developments in the natural gas and oil industry and declines and
fluctuations in the prices for natural gas and oil, developments in
international relations and the commencement or expansion of hostilities by the
United States or other governments and events of terrorism, weather events
disrupting natural gas and oil operations and other factors could have a
material adverse effect on the Company. Material declines in the prices for
natural gas and oil can be expected to adversely affect the Company's revenues.
The Company cautions readers that various risk factors could cause the Company's
operating results and financial condition to differ materially from those
expressed in any forward-looking statements made by the Company and could
adversely affect the Company's ability to pursue its business strategy and
plans. Readers should refer to the Company's Annual Report on Form 10-K and the
risk factors disclosed therein.
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